Saudi Arabia deposits US$200 million to shore up Yemen riyal

Saudi Arabia is to deposit $200 million in the Yemeni central bank, now based in the government’s temporary capital of Aden, to help stem a slide in the value of the riyal that has caused food prices in the famine-threatened country to soar. (AFP pic)

RIYADH: Saudi Arabia is to deposit US$200 million in the Yemeni central bank to help stem a slide in the value of the riyal that has caused food prices in the famine-threatened country to soar.

King Salman “approved a request” from Yemeni President Abedrabbo Mansour Hadi to provide the emergency credit, the official Saudi Press Agency reported late Monday.

The oil-rich kingdom, which leads a coalition fighting Shiite rebels in support of Hadi’s beleaguered government, already deposited US$2 billion in the central bank in January to try to shore up the riyal, which has lost more than two-thirds of its value since the coalition intervened in March 2015.

The new deposit comes less than two weeks after the central bank, based in the government’s temporary capital of Aden, raised interest rates on deposits to an all-time high of 27% after the riyal slid more than 36% since January.

The slide has seen a sharp rise in food and fuel prices that triggered protests across the government-held south in early September and prompted the government to raise public sector salaries by 30%.

The Yemeni riyal rose on news of the latest Saudi deposit, trading at just under 700 to the dollar on Tuesday against 820 the previous day, according to money-changers in the rebel-held capital Sanaa.

UN Office for the Coordination of Humanitarian Affairs warned last month that the currency depreciation was likely to make another 3.5 million Yemenis food insecure, in addition to 8.4 million people who already need emergency food assistance.

The charity Save the Children has warned that more than five million children are at risk of famine.

The conflict in Yemen has killed nearly 10,000 people since 2015, most of them civilians, and triggered what the United Nations has described as the world’s worst humanitarian crisis.